Item
2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The
Company executed a promissory note with one of our shareholders and board members in the amount of $892,679. The note is non-convertible
and bears an interest rate of 10% per annum, and due April 30, 2015. This note due date was subsequently extended to May 31, 2016.
On June 8, 2016, this note was consolidated with the January 15, 2015 $400,000 promissory note to form a $1,292,679 non-convertible
note bearing an interest rate of 10% per annum and due July 15, 2018.
On
January 16, 2015 the Company executed a non-convertible promissory note with warrants attached, with one of our shareholders and
board members, for $400,000 at 10% interest per annum, due June 30, 2015, secured by T4EDU Contract 0006/2017 Work Orders 5, 6,
7, and 8 less Zakat and holdback, to finance operations and inventory purchases.
The
warrants were valued using the stock price on the date of grant, discount rates 0.35%, and volatility approximating 180%. The
value of the debt discount is accreted up to the face value of the promissory note over the term of the note using the effective
interest method.
This note was subsequently extended to April 30, 2016 and then combined
with the $892,679 on June 8, 2016 totaling to a principle balance of $1,292,679 extended to July 15, 2018.
On
February 17, 2015 the Company executed a promissory note with one of our shareholders and board members, for $135,000 at 10% interest
per annum, due June 30, 2015, secured by T4EDU existing AR on completed contracts, to finance operations and inventory purchases.
This note due date was extended to April 30, 2016 and then May 31, 2016. This promissory note was consolidated with the remaining
$40,000 principle balance on the April 20, 2015 promissory note to form a $175,000 promissory note at 10% interest per annum,
due
January 15, 2019.
On
April 20, 2015, the Company executed a promissory note with one of our shareholders and board members, for $135,000 at 10% interest
per annum, due June 30, 2015, secured by existing AR, to finance operations and inventory purchases. There is no conversion feature
associated with this promissory note.
This note
was extended to January 31, 2016. Principal payments of $95,000 were made by the Company in September 2015, leaving a $40,000
principal balance outstanding on December 31, 2015. There is no conversion feature associated with this Promissory Note. This
note was extended to May 31, 2016.
This promissory note was consolidated with the remaining
February 17, 2015 promissory note $135,000 principle balance on the April 20, 2015 promissory note to form a $175,000 promissory
note at 10% interest per annum, due
January 15, 2019.
On
February 6, 2016 the Company executed a promissory note with one of our shareholders and board members, for $100,000 at 10% interest
per annum. The promissory note was due February 29, 2016 and was extended multiple months to April 30, 2016. There is no conversion
feature associated with this promissory note. The principle balance at March 31, 2016 was $100,000. The Accrued interest at March
31, 2016 was $1,452. This note was subsequently combined with promissory notes: March 16, 2016 for $100,000; April 1, 2016 for
$100,000; and April 19, 2016 for $40,000. The resulting $340,000 promissory note bearing an interest rate of ten percent (10%)
per annum has a due date of December 31, 2016.